Making Tax Digital Income Tax Checklist for April 2026

If you’re a sole trader or landlord earning over £50,000 annually, you’ll need to join Making Tax Digital for Income Tax (MTD ITSA) from April 2026. While this might sound daunting, getting organised now will make the transition much easier and less stressful.

What is Making Tax Digital for Income Tax?

Making Tax Digital for Income Tax (also known as MTD ITSA) represents the next phase of HMRC’s digital transformation.

Unlike the current system where you submit one annual Self-Assessment return, this new regime requires quarterly digital updates about your income and expenses, plus an end-of-period statement.

This applies to sole traders and landlords with qualifying income over £50,000. From April 2027, the threshold drops to £30,000, bringing even more businesses into MTD.

Here’s your complete checklist to make the transition to MTD go smoothly.

1. Choose your MTD-compatible software

Your first priority is selecting suitable bookkeeping software that can handle MTD ITSA requirements. Popular options include:

  • Xero – comprehensive features with strong reporting capabilities
  • QuickBooks – user-friendly with excellent mobile app functionality
  • FreeAgent – designed specifically for freelancers and small businesses
  • Sage – robust solution for more complex business structures

Don’t rush this decision because it could have far reaching implications. The software you choose will become central to your business operations, so consider factors like ease of use, cost per user, customer support and integration with your bank feeds.

2. Set up digital record keeping

Gone are the days of pitching up to your accountant with a carrier bag full of receipts. MTD ITSA requires you to maintain digital records of all business income and expenses. This means:

  • Digitise everything – receipts, invoices, bank statements must be stored electronically
  • Real-time entry – update your records regularly rather than leaving everything until quarter-end
  • Categorise consistently – ensure expenses are properly classified for accurate reporting
  • Back up your data – cloud-based solutions offer automatic backups, but verify this regularly

3. Establish quarterly reporting routines

Under MTD ITSA, you’ll submit quarterly updates by specific deadlines:

  • Q1 (April-June): due by 5 August
  • Q2 (July-September): due by 5 November
  • Q3 (October-December): due by 5 February
  • Q4 (January-March): due by 5 May

Create calendar reminders well before each deadline. Many successful business owners we work with dedicate the first week of each new quarter to reviewing and submitting their previous quarter’s data.

4. Prepare your Final Declaration

Beyond quarterly updates, you’ll need to submit a final declaration by 31st January in the year following the tax year for which you are reporting. This replaces the traditional Self-Assessment deadline and includes:

  • Final adjustments to your quarterly submissions
  • Claims for annual allowances and reliefs
  • Confirmation that all information is complete and accurate

5. Review your accounting period

MTD ITSA works best with accounting periods that align with the tax year (6 April to 5 April). If your current accounting period differs, consider whether changing would simplify your reporting obligations. A year ending 31 March is also acceptable.

Speak with your accountant about the implications of any changes, as this could affect when you need to join MTD ITSA and how your transitional year is handled.

6. Update your business processes

Making Tax Digital isn’t just about software – it requires changes to how you operate:

  • Invoice immediately – prompt invoicing improves cash flow and ensures income is recorded in the correct period
  • Photograph receipts instantly – use your phone to capture expenses as they happen
  • Reconcile bank accounts monthly – regular reconciliation catches errors early and keeps records accurate
  • Review quarterly – use each submission as an opportunity to assess business performance

7. Plan for professional support

While MTD ITSA aims to simplify tax administration by making everything digital, the transition period will be complex. Professional support can help with:

  • Initial software setup and training
  • Establishing efficient record-keeping processes
  • Understanding quarterly submission requirements
  • Managing the transition from annual to quarterly reporting

Many business owners find that investing in professional guidance during the first year pays dividends through time saved and errors avoided.

8. Test your systems early

Don’t wait until the last minute to test your new digital processes. Run practice submissions, ensure your software integrates properly with your bank feeds, and verify that your categorisation system works effectively.

The more familiar you become with your new systems before the mandatory start date, the smoother your transition will be.

Contact Adams Accountancy

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Making Tax Digital doesn’t have to be a headache

Getting ahead of Making Tax Digital for Income Tax requirements sets your business up for better financial management. The quarterly review cycle provides regular opportunities to assess performance and identify trends, allowing you to make informed decisions about your business future.

Need help preparing for MTD ITSA? Contact Adams Accountancy for a free consultation about transitioning your business to digital tax reporting.

About the Author

Michelle Adams is a qualified accountant and director at Adams Accountancy, specialising in helping small businesses navigate tax compliance and digital transformation. With over 15 years of experience supporting limited companies, sole traders and landlords across Kent, Michelle and her team make complex tax requirements simple and manageable for busy business owners.

Frequently Asked Questions

When do I need to join Making Tax Digital for Income Tax?

If you’re a sole trader or landlord earning over £50,000, you must join from April 2026. Those earning over £30,000 follow from April 2027.

Can I continue using spreadsheets under MTD ITSA?

No, you must use MTD-compatible software that can submit data digitally to HMRC. Bridging software may connect spreadsheets to compliant systems, but pure spreadsheet solutions won’t meet requirements.

What happens if I miss a quarterly deadline?

HMRC will apply penalties for late quarterly submissions, similar to current Self Assessment penalties. The penalty structure includes both fixed penalties and daily penalties for extended delays.

Do I need to keep paper receipts under MTD ITSA?

You must maintain digital copies of all supporting documentation. Paper receipts should be photographed or scanned, but you may choose to keep originals as additional backup.

Can my accountant submit quarterly updates on my behalf?

Yes, your accountant can handle submissions if they have appropriate software and authorisation. However, you remain responsible for ensuring information accuracy and meeting deadlines.

Will MTD ITSA change how much tax I pay?

No, MTD ITSA is about how and when you report income, not how much tax you owe. However, quarterly reporting may help with better cash flow planning for tax payments. HMRC may move to quarterly tax payments in the future.

What if my income fluctuates around the £50,000 threshold?

You’re assessed based on your income in the tax year before MTD ITSA applies. If you exceed £50,000 in 2024/25, you’ll need to join from April 2026 regardless of subsequent years’ income.

Will MTD cost me more?

As you’ll need to use compatible software, your business will incur a cost for this if you aren’t already using it. Your accountant may also need to charge extra if they are undertaking quarterly submissions on your behalf.

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